George Osborne has said he is "very happy" for the government to consider publishing senior cabinet ministers' personal tax returns.

The chancellor said he had no problem with the government adopting US-style transparency over personal tax matters.

"Personally, I don't set my face against it. They do it in America. My personal principle has been: make the rules in general more transparent," he told the Daily Telegraph.

The transparency issue arose after a public row between Boris Johnson and Ken Livingstone, rivals in the London mayoral election race, over their tax affairs. The pair were involved in angry exchanges last week amid accusations of avoiding income tax by channelling earnings through companies.

Livingstone, the Labour mayoral candidate, has come under fire for channelling earnings through a company so that they are liable for lower-rated corporation tax rather than income tax.

Johnson, the Conservative mayor, called Livingstone a "fucking liar" over on-air allegations that Johnson had operated a similar arrangement.

The business secretary, Vince Cable, also declared that he was prepared to be open about his personal finances.

"I'm quite happy to be open about it. I have no problem with my tax return being published while I am in government," he told the Telegraph.

But the chancellor's support for greater transparency was condemned by the Ukip leader, Nigel Farage, who said publishing tax returns would deter some talented potential political candidates from standing for office.

He said: "Osborne wants politicians to publish their tax returns in the cause of transparency. But that will never be enough. When will it end? The last 20 years of tax returns? School reports? Medical records?"

Osborne said he was unrepentant about controversial measures in the recent budget, including the reduction in the top rate of income tax.

The chancellor said he would be open in future about whether he personally benefitted from the income tax reduction.

"No doubt, next time I fill in a tax return, I will be asked the question and will give you a straightforward answer," he said, adding that he had not been in the top earner category last time.

Osborne, who has faced a backlash over the tax cut for top earners and other budget measures, such as the "granny tax" of reduced income tax allowances for pensioners, hit back at accusations that the Conservatives were out of touch.

"We are not in a daily popularity contest. But Britain is in a daily contest around the world," he said. "I think this government is helping Britain to win that contest."

His latest defence of the measures came as an opinion poll showed voter confidence in his ability to run the UK economy had slumped to an all-time low. As many as 60% do not trust him with the nation's purse strings, up eight points on last month, while those expressing confidence were down from 25% to 21%.

That net score of -39, in a ComRes poll for ITV News, is much worse than his previous low of -30 in July last year.